Tuesday, September 29, 2009

Saving Strategies That Make Sense

For me, turning 40 is a time of great financial need. Never before have I faced such important money matters as I am right now. I am feeling the full weight of all my responsibilities and trying to get my financial house in order. I am saving for a bigger home, trying to come out of debt while setting up a nest egg for my future. When you finally reach your 40s, it seems the party has ended, and you now have so many more important places and ways to spend and save your money.

Hopefully by this time, we’ve learned the value of the dollar and where to invest. The good news is even after this past year’s financial mess, we still have plenty of time to recoup the losses. And if you started saving right after college, good for you, you are well ahead of me. But if you like me and haven’t saved too much (or none at all), don’t panic. It’s never too late to save. You just have to make tough choices.

I asked my trusty financial advisor what his advice was were on navigating these daunting times and helping me become more financially savvy.

My retirement plans are piling up:

My first goal is to curb my dangerous shopping habit and eliminate all my debt so I’m no longer paying interest on things I’ve already purchased and probably can’t even name. In the past, I’ve periodically called up my credit card company and asked if they would lower my interest rate. Another trick I’ve done is make major purchases like my MacBook on a credit card with zero interest. I just make sure I’m finishing paying off the credit card before the zero interest deal is over. Be sure to canceled that credit card because you really don’t need any more than two.

My second goal is to pay myself and save enough money for a house and even retirement one day.

To start saving, you should put as much money away in your company’s pre-tax 401k savings plan, a retirement fund like a roth ira or other tax-advantaged avenues.

Further, there are lots of little things we can do in these trying times, some of which you may not like, but they will make a difference in the long run. Look around at your expenses, I’m sure there are places where you can trim you expenses like expensive coffee, blow-outs and take-out lunches. While it is definitely nice to have these “things”, they are not necessities and can help making ends meet.

Another quick area to cut back is on expensive beauty products and services and learning to shop at drug stores and lower-priced department stores. (this one is especially rough, but retailers are still struggling and there will be a lot of great sales this holiday season). You can also cut out personal training -- this is a luxury and is another great way for women to save a lot of money. “These things are nice, but you have to get rid of it,” he said.

I also asked my good friend Paula, who works on the distressed debt sales and trading group at Morgan Stanley, what her thoughts were on savings and where to put it. Her suggestion: Diversify. Spread your assets around in money market accounts as well as the stock market to maximize your goals and minimize your risks.

So is the recent rise in the stock market mean it’s a good time to go back in the game?

As long as you’re investing with high-quality, blue-chip companies like Procter & Gamble rather fly-by-the-night opportunities, Paula said.

Still, Paula believes, as do I, you still need to reward yourself. “Treating yourself is also taking care of yourself,” Paula said. “It’s about making conscious decisions about what and where you spend your money.”

I just canceled not only the personal trainer, but my pricey Equinox gym membership which was painful. I've also learned how to do my own mani/pedis (something I never could fathom before) so well that I get compliments on both from strangers! And, my nails have never been healthier. I've also cut back on the hair department—really don't splurge on the weekly blow outs anymore. Still have a long way to go on the saving department though. A full-time job would greatly help! Good tips.

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About Me

I am a stay-at-home mom to Hannah Rose. Hannah was born into this world on May 20, 2011. Little did my husband Michael and I know her world would be a silent one. She has been wearing hearing aids since she was 2.5 months but they aren't powerful enough for her to hear. So Hannah will have cochlear ear implants on February 29, 2012 so she can hear and sing and dance. This blog chronicles our lives together and Hannah's journey into the hearing world. So LISTEN UP! This is going to be an amazing ride.
I'll be sharing many of Hannah's milestone days as well as the simple pleasures of being young and free.
It's my hope to share Hannah's story with our family and friends and help people who share a similar story to Hannah's. We are so grateful for the incredible support of family and friends and have met so many amazing families along the way.